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TMI Blog2025 (1) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of purchases holding them as bogus purchases. 2. The facts relating to the case are discussed in brief. The assessee is a trader, importer and exporter of diamonds. The Revenue carried out search and seizure operations in the hands of Shri Rajendra Jain/Sanjay Choudhary/Dharmi Chand Jain and his group of companies on 03-10-2013. It was noticed that the above said group were providing only accommodation entries, inter alia, in the form of bogus sales bills without actually supplying the goods. In the statement recorded from Shri Rajendra Jain and certain other employees, they admitted that they were providing accommodation bills. It was noticed by the Investigation Wing that the assessee has also been given sales bills by the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases and accordingly, entire bogus purchases are liable to be disallowed. He also took support of the decision rendered by the Hon'ble Supreme Court in the case of N.K.Proteins (250 taxman 022)(SC) for his decision. The AO also referred to the decision rendered by the Hon'ble Gujarat High Court in the case of N K Industries (ITA No.240 of 2003), wherein 100% of bogus purchases was disallowed. Accordingly, he disallowed the entire amount of purchases mentioned in the table above in the respective assessment years. 4. Before the Ld.CIT(A), the assessee made detailed submissions and submitted that the adverse inference drawn by the AO is not correct. The assessee submitted that the AO did not find fault with the books of accounts and also did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha Impex and M.s Kangan Jewels there is a corresponding export sale. Export goes through customs and it is done through proper banking channels. So the sales are genuine and cannot be challenged. Without purchase of the goods there cannot be export of the goods. h. The payment for each purchase has been made by account payee cheque and it is properly reflected in the Bank statements and Books of Accounts. i. The purchase and sales are properly recorded in assessees stock register purchase register and sales register. j. The said party has also confirmed the transaction by way of Affidavit and also ledger confirmation for the same has been provided. k. The books of accounts are also audited under Section 44AB of the Income Tax Act 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.CIT(A) is out of context and deserves to be rejected. We further notice that the AO did not find any defect or deficiency in the documents furnished by the assessee to prove the purchases. The report given by the Investigation Wing is a generalized report. Hence, it is the duty of the AO to conduct independent enquiry to disprove the claim of the assessee that the purchases were genuine. The onus on the AO further increases, when the supplier confirms the transactions. However, the AO did not conduct any such independent enquiry. He has simply placed reliance on the investigation report given by the Investigation Department. The Ld.AR also submitted that the AO did not furnish any of those materials to the assessee. The Ld.AR also stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply, when the sales recorded by the assessee has been accepted. The assessee has also demonstrated before the Ld.CIT(A) that the decision rendered by the Hon'ble Supreme Court in the case of N K Proteins (supra) will not apply to the facts of the present case. We notice that the Ld.CIT(A) did not counter the said contentions. On a perusal of the facts prevailing between the present case and the case of N K Proteins, which have been tabulated and extracted by the Ld.CIT(A), we agree with the contentions of the assessee. 9. In the instant case also, the AO has accepted the sales recorded by the assessee. The assessee could not have affected sales without purchasing the goods. The assessee could match the sale with corresponding purchases. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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